Exhibit 99.1
Texas Roadhouse, Inc. Announces Third Quarter 2013 Results
LOUISVILLE, KY. (October 28, 2013) — Texas Roadhouse, Inc. (NasdaqGS: TXRH), today announced financial results for the 13 and 39 week periods ended September 24, 2013.
| | Third Quarter | | Year to Date | |
($000’s) | | 2013 | | 2012 | | % Change | | 2013 | | 2012 | | % Change | |
| | | | | | | | | | | | | |
Total revenue | | 334,770 | | 308,656 | | 8 | | 1,046,565 | | 953,800 | | 10 | |
Income from operations (a) | | 25,696 | | 27,734 | | (7 | ) | 93,661 | | 88,383 | | 6 | |
Net income (a) | | 17,170 | | 18,067 | | (5 | ) | 63,304 | | 57,246 | | 11 | |
Diluted EPS (a) | | $ | 0.24 | | $ | 0.25 | | (5 | ) | $ | 0.89 | | $ | 0.80 | | 11 | |
| | | | | | | | | | | | | | | | | |
(a) 2012 YTD includes a charge related to a legal settlement discussed below.
Results for the third quarter included:
· Diluted earnings per share decreased 4.6% to $0.24 from $0.25 in the prior year period;
· Comparable restaurant sales increased 2.6% at company restaurants and increased 4.0% at franchise restaurants;
· Four company restaurants were opened;
· Cost of sales, as a percentage of restaurant sales, increased 150 basis points to 35.1% primarily due to food cost inflation of just over 8% in the quarter;
· Restaurant margin, as a percentage of restaurant sales, decreased 75 basis points to 17.2% primarily due to higher commodity costs, partially offset by approximately $1.3 million in benefits recorded relating to general liability insurance; and
· Pre-opening costs were $2.3 million higher compared to the prior year period primarily due to seven more restaurant openings planned in the fourth quarter of 2013 compared to the fourth quarter of 2012.
Results for the year-to-date included:
· Excluding the impact of a prior year charge, diluted earnings per share increased 5.4% to $0.89 from $0.84 in the prior year. The year-to-date 2012 results included a pre-tax charge of $5.0 million ($3.1 million after-tax) which had a negative impact of $0.04 on diluted earnings per share;
· Comparable restaurant sales increased 3.7% at company restaurants and increased 4.2% at franchise restaurants;
· 14 company and three franchise restaurants were opened;
· Restaurant margin, as a percentage of restaurant sales, decreased 45 basis points to 18.3%; and
· Costs associated with the Company’s annual managing partner conference were $2.1 million higher compared to the prior year period.
Kent Taylor, Chief Executive Officer of Texas Roadhouse, Inc., commented, “Our top-line momentum continued this quarter highlighted by positive comparable restaurant sales, including positive traffic growth, and strong performance from our newest restaurants. However, we continue to be challenged by high single-digit commodity cost inflation and higher pre-opening costs this quarter. Looking ahead, we are encouraged by expectations of much lower commodity cost inflation in 2014, and we are excited to be on pace for another year
of 25 to 30 restaurant openings. Long-term, we believe that our growth potential and continued restaurant-operations focus, along with our strong balance sheet and healthy cash flow, position us well for future success.”
2013 Outlook
The Company reported that comparable restaurant sales at company restaurants for the first four weeks of its fourth quarter of fiscal 2013 increased 3.4% compared to the prior year period.
Management provided the following expectations for full year 2013:
· Positive comparable restaurant sales growth;
· 28 company restaurant openings;
· Food cost inflation of approximately 7.0%, which is updated from the previous expectation of 6.5% to 7.0%;
· An income tax rate of 30.0% to 30.5%; and
· Total capital expenditures of approximately $105.0 million, which is updated from the previous expectation of $100.0 to $105.0 million.
2014 Outlook
Management provided the following expectations for full year 2014:
· Positive comparable restaurant sales growth;
· 25 to 30 company restaurant openings;
· Low single digit food cost inflation;
· An income tax rate of 30.0% to 31.0% which is higher than the 2013 income tax rate as a result of the potential expiration of certain federal tax credits at the end of 2013; and
· Total capital expenditures of $100.0 to $110.0 million.
Conference Call
The Company is hosting a conference call today, October 28, 2013, at 5:00 p.m. Eastern Time to discuss these results. The dial-in number is (877) 879-6209 or (719) 325-4817 for international calls. A replay of the call will be available for one week following the conference call. To access the replay, please dial (877) 870-5176 or (858) 384-5517 for international calls, and use 2899563 as the pass code. There will be a simultaneous Web cast conducted at www.texasroadhouse.com.
About the Company
Texas Roadhouse is a casual dining concept that first opened in 1993 and today operates over 410 restaurants system-wide in 48 states and two foreign countries. For more information, please visit the Company’s Web site at www.texasroadhouse.com.
Forward-looking Statements
Certain statements in this release that are not historical facts, including, without limitation, those relating to our anticipated financial performance, are forward-looking statements that involve risks and uncertainties. Such statements are based upon the current beliefs and expectations of the management of the Company. Actual results may vary materially from those contained in forward-looking statements based on a number of factors including, without limitation, the actual number of restaurants opening; the sales at these and our other company and franchise restaurants; changes in restaurant development or operating costs, such as food and labor; our ability to acquire franchise restaurants; our ability to integrate the franchise restaurants we acquire or other concepts we develop; our ability to continue to generate the necessary cash flows to fund our new restaurant growth, our ability to continue our share repurchase program and pay a quarterly cash dividend; strength of consumer spending; pending or future legal claims; conditions beyond our control such as weather, natural disasters, disease outbreaks, epidemics or pandemics impacting our customers or food supplies; acts of war or terrorism and other factors disclosed from time to time in our filings with the U.S. Securities and Exchange Commission. Investors should take such risks into account when making investment decisions. Shareholders and other readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. We undertake no obligation to update any forward-looking statements.
# # #
Contacts:
Investor Relations
Tonya Robinson
502-515-7300
Media
Travis Doster
502-638-5457
Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Statements of Income
(in thousands, except per share data)
(unaudited)
| | 13 Weeks Ended | | 39 Weeks Ended | |
| | September 24,
2013 | | September 25,
2012 | | September 24,
2013 | | September 25,
2012 | |
| | | | | | | | | |
Revenue: | | | | | | | | | |
Restaurant sales | | $ | 331,746 | | $ | 306,025 | | $ | 1,037,239 | | $ | 945,583 | |
Franchise royalties and fees | | 3,024 | | 2,631 | | 9,326 | | 8,217 | |
| | | | | | | | | |
Total revenue | | 334,770 | | 308,656 | | 1,046,565 | | 953,800 | |
| | | | | | | | | |
Costs and expenses: | | | | | | | | | |
Restaurant operating costs (excluding depreciation and amortization shown separately below): | | | | | | | | | |
Cost of sales | | 116,570 | | 102,930 | | 361,334 | | 319,445 | |
Labor | | 99,003 | | 91,507 | | 302,387 | | 278,089 | |
Rent | | 7,181 | | 6,489 | | 21,390 | | 19,120 | |
Other operating | | 51,949 | | 50,183 | | 162,716 | | 151,967 | |
Pre-opening | | 4,746 | | 2,458 | | 11,810 | | 8,823 | |
Depreciation and amortization | | 12,462 | | 11,828 | | 36,864 | | 34,721 | |
Impairment and closure | | 103 | | 24 | | 187 | | 63 | |
General and administrative (1) | | 17,060 | | 15,503 | | 56,216 | | 53,189 | |
| | | | | | | | | |
Total costs and expenses | | 309,074 | | 280,922 | | 952,904 | | 865,417 | |
| | | | | | | | | |
Income from operations (1) | | 25,696 | | 27,734 | | 93,661 | | 88,383 | |
| | | | | | | | | |
Interest expense, net | | 525 | | 603 | | 1,687 | | 1,776 | |
Equity income from investments in unconsolidated affiliates | | 173 | | 141 | | 571 | | 303 | |
| | | | | | | | | |
Income before taxes (1) | | 25,344 | | 27,272 | | 92,545 | | 86,910 | |
Provision for income taxes | | 7,500 | | 8,778 | | 26,617 | | 27,815 | |
| | | | | | | | | |
Net income including noncontrolling interests (1) | | $ | 17,844 | | $ | 18,494 | | $ | 65,928 | | $ | 59,095 | |
Less: Net income attributable to noncontrolling interests | | 674 | | 427 | | 2,624 | | 1,849 | |
Net income attributable to Texas Roadhouse, Inc. and subsidiaries (1) | | $ | 17,170 | | $ | 18,067 | | $ | 63,304 | | $ | 57,246 | |
| | | | | | | | | |
Net income per common share attributable to Texas Roadhouse, Inc. and subsidiaries: | | | | | | | | | |
Basic | | $ | 0.24 | | $ | 0.26 | | $ | 0.91 | | $ | 0.82 | |
Diluted | | $ | 0.24 | | $ | 0.25 | | $ | 0.89 | | $ | 0.80 | |
| | | | | | | | | |
Weighted average shares outstanding: | | | | | | | | | |
Basic | | 70,361 | | 70,482 | | 69,914 | | 70,004 | |
Diluted | | 71,620 | | 71,928 | | 71,175 | | 71,480 | |
(1) Results for the 39 weeks ended September 25, 2012 include a $5.0 milllion charge, ($3.1 million after-tax), relating to the settlement of a legal matter. The settlement charge is included in general and administrative costs.
Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
| | September 24, 2013 | | December 25, 2012 | |
| | | | | |
Cash and cash equivalents | | $ | 87,344 | | $ | 81,746 | |
Other current assets | | 35,022 | | 40,726 | |
Property and equipment, net | | 565,433 | | 531,654 | |
Goodwill | | 113,454 | | 113,435 | |
Intangible assets, net | | 7,877 | | 9,264 | |
Other assets | | 17,938 | | 14,429 | |
| | | | | |
Total assets | | $ | 827,068 | | $ | 791,254 | |
| | | | | |
Current maturities of long-term debt and obligations under capital leases | | 248 | | 338 | |
Other current liabilities | | 131,077 | | 158,324 | |
Long-term debt and obligations under capital leases, excluding current maturities | | 51,056 | | 51,264 | |
Other liabilities | | 53,953 | | 50,591 | |
Texas Roadhouse, Inc. and subsidiaries stockholders’ equity | | 584,916 | | 525,084 | |
Noncontrolling interests | | 5,818 | | 5,653 | |
| | | | | |
Total liabilities and equity | | $ | 827,068 | | $ | 791,254 | |
Texas Roadhouse, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
| | 39 Weeks Ended | |
| | September 24,
2013 | | September 25,
2012 | |
| | | | | |
Cash flows from operating activities: | | | | | |
Net income including noncontrolling interests | | $ | 65,928 | | $ | 59,095 | |
Adjustments to reconcile net income to net cash provided by operating activities | | | | | |
Depreciation and amortization | | 36,864 | | 34,721 | |
Share-based compensation expense | | 10,583 | | 9,754 | |
Other noncash adjustments | | 843 | | (3,630 | ) |
Change in working capital | | (14,557 | ) | (8,946 | ) |
Net cash provided by operating activities | | 99,661 | | 90,994 | |
| | | | | |
Cash flows from investing activities: | | | | | |
Capital expenditures - property and equipment | | (71,888 | ) | (63,146 | ) |
Proceeds from sale of property and equipment, including insurance proceeds | | (39 | ) | 255 | |
Net cash used in investing activities | | (71,927 | ) | (62,891 | ) |
| | | | | |
Cash flows from financing activities: | | | | | |
Repayments of revolving credit facility, net | | — | | (10,000 | ) |
Dividends paid | | (29,939 | ) | (18,134 | ) |
Other financing activities | | 7,803 | | 9,349 | |
Net cash used in financing activities | | (22,136 | ) | (18,785 | ) |
| | | | | |
Net increase in cash and cash equivalents | | 5,598 | | 9,318 | |
Cash and cash equivalents - beginning of year | | 81,746 | | 78,777 | |
Cash and cash equivalents - end of period | | $ | 87,344 | | $ | 88,095 | |
Texas Roadhouse, Inc. and Subsidiaries
Supplemental Financial and Operating Information
($ amounts in thousands, except weekly sales by group and RM $ per store week)
(unaudited)
| | Third Quarter | | Change | | Year to Date | | Change | |
| | 2013 | | 2012 | | vs LY | | 2013 | | 2012 | | vs LY | |
| | | | | | | | | | | | | |
Restaurant openings | | | | | | | | | | | | | |
Company - Texas Roadhouse | | 4 | | 3 | | 1 | | 13 | | 18 | | (5 | ) |
Company - Other | | 0 | | 0 | | 0 | | 1 | | 0 | | 1 | |
Franchise - Texas Roadhouse | | 0 | | 0 | | 0 | | 3 | | 0 | | 3 | |
Total | | 4 | | 3 | | 1 | | 17 | | 18 | | (1 | ) |
| | | | | | | | | | | | | |
Restaurants open at the end of the quarter | | | | | | | | | | | | | |
Company - Texas Roadhouse | | 331 | | 309 | | 22 | | | | | | | |
Company - Other | | 3 | | 3 | | 0 | | | | | | | |
Franchise - Texas Roadhouse | | 75 | | 72 | | 3 | | | | | | | |
Total | | 409 | | 384 | | 25 | | | | | | | |
| | | | | | | | | | | | | |
Company-owned restaurants | | | | | | | | | | | | | |
Restaurant sales | | $ | 331,746 | | $ | 306,025 | | 8.4 | % | $ | 1,037,239 | | $ | 945,583 | | 9.7 | % |
Store weeks | | 4,294 | | 4,041 | | 6.3 | % | 12,682 | | 11,854 | | 7.0 | % |
Comparable restaurant sales growth (1) | | 2.6 | % | 3.6 | % | | | 3.7 | % | 4.8 | % | | |
Texas Roadhouse restaurants only: | | | | | | | | | | | | | |
Comparable restaurant sales growth (1) | | 2.6 | % | 3.6 | % | | | 3.7 | % | 4.8 | % | | |
Average unit volume (2) | | $ | 999 | | $ | 984 | | 1.6 | % | $ | 3,191 | | $ | 3,102 | | 2.8 | % |
Weekly sales by group: | | | | | | | | | | | | | |
Comparable restaurants (293 units) | | $ | 77,662 | | | | | | | | | | | |
Average unit volume restaurants (25 units) | | $ | 67,409 | | | | | | | | | | | |
Restaurants less than 6 months old (13 units) | | $ | 93,889 | | | | | | | | | | | |
| | | | | | | | | | | | | |
Restaurant operating costs (as a % of restaurant sales) (3) | | | | | | | | | | | | | |
Cost of sales | | 35.1 | % | 33.6 | % | 150 | bps | 34.8 | % | 33.8 | % | 105 | bps |
Labor | | 29.8 | % | 29.9 | % | (6 | )bps | 29.2 | % | 29.4 | % | (26 | )bps |
Rent | | 2.2 | % | 2.1 | % | 4 | bps | 2.1 | % | 2.0 | % | 4 | bps |
Other operating | | 15.7 | % | 16.4 | % | (74 | )bps | 15.7 | % | 16.1 | % | (38 | )bps |
Total | | 82.8 | % | 82.1 | % | 75 | bps | 81.7 | % | 81.3 | % | 45 | bps |
| | | | | | | | | | | | | |
Restaurant margin (4) | | 17.2 | % | 17.9 | % | (75 | )bps | 18.3 | % | 18.7 | % | (45 | )bps |
| | | | | | | | | | | | | |
Restaurant margin $/Store week | | $ | 13,284 | | $ | 13,590 | | (2.2 | )% | $ | 14,935 | | $ | 14,928 | | 0.0 | % |
| | | | | | | | | | | | | |
Franchise-owned restaurants | | | | | | | | | | | | | |
Franchise royalties and fees | | $ | 3,024 | | $ | 2,631 | | 14.9 | % | $ | 9,326 | | $ | 8,217 | | 13.5 | % |
Store weeks | | 975 | | 936 | | 4.2 | % | 2,886 | | 2,808 | | 2.8 | % |
Comparable restaurant sales growth (1) | | 4.0 | % | 4.9 | % | | | 4.2 | % | 5.5 | % | | |
Average unit volume (2) | | $ | 1,038 | | $ | 998 | | 4.0 | % | $ | 3,284 | | $ | 3,134 | | 4.8 | % |
| | | | | | | | | | | | | |
Pre-opening expense | | $ | 4,746 | | $ | 2,458 | | 93.1 | % | $ | 11,810 | | $ | 8,823 | | 33.9 | % |
| | | | | | | | | | | | | |
Depreciation and amortization (3) | | $ | 12,462 | | $ | 11,828 | | 5.4 | % | $ | 36,864 | | $ | 34,721 | | 6.2 | % |
As a % of revenue | | 3.7 | % | 3.8 | % | (11 | )bps | 3.5 | % | 3.6 | % | (12 | )bps |
| | | | | | | | | | | | | |
General and administrative expenses (5) | | $ | 17,060 | | $ | 15,503 | | 10.0 | % | $ | 56,216 | | $ | 53,189 | | 5.7 | % |
As a % of revenue | | 5.1 | % | 5.0 | % | 7 | bps | 5.4 | % | 5.6 | % | (21 | )bps |
(1) Comparable restaurant sales growth includes sales from restaurants open 18 months as of the beginning of the measurement period, excluding sales from restaurants closed during the period.
(2) Average unit volume includes sales from Texas Roadhouse restaurants open six months as of the beginning of the measurement period, excluding sales from restaurants closed during the period.
(3) Depreciation and amortization expense, substantially all of which relates to restaurant-level assets, is excluded from restaurant operating costs and is shown separately as it represents a non-cash charge for the investment in our restaurants.
(4) Restaurant margin represents restaurant sales less cost of sales, labor, rent and other operating costs (as a percentage of restaurant sales). Restaurant margin is widely regarded in the restaurant industry as a useful metric by which to evaluate restaurant-level operating efficiency and performance. Restaurant margin is not a measurement determined in accordance with generally accepted accounting principles (“GAAP”) and should not be considered in isolation, or as an alternative, to income from operations or other similarly titled measures of other companies.
(5) Results for the 39 weeks ended September 25, 2012 included a $5.0 million pre-tax charge for the settlement of a legal matter.
Amounts may not foot due to rounding.
Texas Roadhouse, Inc. and Subsidiaries
Reconciliation of GAAP and Non-GAAP Information
(in thousands, except per share data)
(unaudited)
In addition to the results provided in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) throughout this document, the Company has provided non-GAAP measurements which present operating results on a basis before the impact of a settlement of a legal matter. This item is described in detail throughout this document.
The Company used earnings before the impact of the legal settlement as a key performance measure of results of operations for purposes of evaluating performance internally. This non-GAAP measurement is not intended to replace the presentation of our financial results in accordance with GAAP. Rather, the Company believes that the presentation of results before the legal settlement provides additional information to facilitate the comparison of past and present operations, excluding items that the Company does not believe were indicative of our ongoing operations in the 39 weeks ended September 25, 2012.
| | For the 39 weeks Ended | |
| | September 24, 2013 | | September 25, 2012 | |
Net income attributable to Texas Roadhouse, Inc. and subsidiaries, excluding settlement charge | | $ | 63,304 | | $ | 60,308 | |
Amount reserved for settlement of a legal matter, net of tax (1) | | $ | — | | $ | (3,062 | ) |
Net income attributable to Texas Roadhouse, Inc. and subsidiaries | | $ | 63,304 | | $ | 57,246 | |
| | | | | |
Weighted average diluted shares outstanding | | 71,175 | | 71,480 | |
| | | | | |
Diluted earnings per share, excluding settlement charge | | $ | 0.89 | | $ | 0.84 | |
Impact of settlement charge on diluted earnings per share | | $ | — | | $ | (0.04 | ) |
Diluted earnings per share | | $ | 0.89 | | $ | 0.80 | |
(1) Amount reserved in the first quarter of fiscal 2012 for the settlement of a legal matter was $5.0 million before the statutory income tax rate. The settlement amount was included in general and administrative costs on the Company’s Condensed Consolidated Statements of Income.
